posted at 9:25 am on August 30, 2011 by Ed Morrissey

Wonder what Barack Obama’s much-heralded — and much-delayed — jobs plan will look like? According to Bloomberg, it’s going to look a lot like all of Obama’s previous job-creation plans. Long on gimmicks and short on the long-term approach, its only virtue appears to be that Obama can’t spend as much money on it:

The ideas President Barack Obama is considering for his new jobs agenda could put hundreds of thousands of people back to work, and still have a limited impact in an economy that remains 6.8 million jobs behind its pre-recession peak, economists said.

Among the options Obama is considering is a version of a tax credit for new hires that could spur the creation of 900,000 additional jobs at a cost of $30 billion, according to an estimate by Michael Greenstone, an economics professor at the Massachusetts Institute of Technology and former chief economist for Obama’s Council of Economic Advisers.

“It allows the private sector to lead the economy toward the areas where the payoffs are greatest,” Greenstone said. …

The White House is considering more infrastructure spending, tax incentives to spur hiring, a reduction in the employer portion of the payroll tax credit and changes to unemployment insurance to subsidize worker retraining for inclusion in a jobs plan Obama is to announce next week, said a person familiar with the discussions.

Tax credits for new hires? Even at the subsidy rate contemplated here, if applied directly, businesses would gain a $33,333 tax credit once for hiring someone, and the benefit will almost certainly be nowhere near that level. Previous proposals have put the credit level on a sliding scale, with a maximum closer to $6,000 for jobs paying $100,000 or more. That doesn’t give businesses any reason to expand staff on its own. A job represents an investment in which businesses expect to serve additional demand that will more than pay for the labor cost involved. A $6000 one-time tax credit — or even a $33,000 credit — won’t compensate a business for the hiring costs, the overhead, and the risk of even hiring a person for a new $50,000-per-year job.

Will businesses take advantage of this tax credit? You bet — for new hires they would have made anyway. In early 2010, CNN reported on an almost identical Jimmy Carter program when the Democrats in Congress floated the same notion:

The ghost of Jimmy Carter’s one-term presidency is hovering over President Obama as the Democrats try to pass a jobs bill in time for this year’s elections. So why is the centerpiece of the measure — a tax break for companies that make new hires — a play straight from Carter’s economic policy circa 1977? …

Critics of Carter’s plan — and Congress’ now — say that the problem with any jobs credit is the potential for waste. It’s estimated that of the companies that claimed the tax credit under Carter’s plan, two-thirds would have hired those employees regardless of the tax break.

“It’s a windfall for companies that want to expand anyway,” says Rea Hederman, a senior policy analyst at the Heritage Foundation. Should the bill pass, Hederman says the big beneficiaries of the tax credit this time around would be companies in the big-growth areas of health care and education.

Another problem with the 1977-78 effort is that many companies, especially small businesses, didn’t even know about the tax credit. A survey by the National Federation of Independent Business found that only 43% of their members knew of the law in January 1978.

Meanwhile bigger companies were, and still are, better-equipped to take advantage of the tax breaks because their armies of accountants can keep up with the complex changes. (Never mind that the law behind the 1970s tax credit was called the Tax Reduction and Simplification Act.)

So this will be just like Cash for Clunkers and the homebuyer tax credits Obama pushed in the first year of his presidency. All it will do will be to subsidize transactions that would have taken place anyway with money borrowed from China and other creditors and end up producing no real economic growth on its own.

As for infrastructure spending, we’ve seen that before in this presidency. Porkulus in 2009 accelerated public-works projects that were supposedly “shovel ready” as a means to stimulate the economy. Two years later, the public-works projects are complete, and the economic growth never arrived. Why? Because American economic growth does not come from rebuilding highways and replacing sidewalks. It comes from investment, innovation, and economic freedom — all areas targeted and damaged by Obama’s regulatory assault on the private sector.

House Majority Leader Eric Cantor (R-Va.) on Monday laid out an ambitious anti-tax and anti-regulations agenda for the fall.

In a memo to rank-and-file Republicans, Cantor said the House will target 10 major regulations for elimination, and will also seek to enact one major tax cut for businesses.

Republicans are offering the agenda as a contrast to President Obama’s jobs plan, which is set for formal announcement next week and is expected to include stimulus spending.

“I think the administration has … already demonstrated that it is not interested in focusing on private sector growth,” Cantor said after announcing the plan on Fox News. “What our list demonstrates is: Washington now has gotten in the way, and we’ve got to make it easier, finally, for small business people to grow.”

Obama should take a page from the GOP — but he won’t. And as a result, we’ll get the same stagnation that we’ve seen from 2009-present all the way through 2013.

Blowback

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It’s all temporary tinkering, coupled with a re-election campaign, and it won’t solve the main problem, i.e. that the Obama administration is quite rightly perceived as the most anti-business and anti-free market regime within memory. JFK may have called businessmen SOBs but Obama continues to treat them as if they really are.

Among the options Obama is considering is a version of a tax credit for new hires that could spur the creation of 900,000 additional jobs at a cost of $30 billion, according to an estimate by Michael Greenstone, an economics professor at the Massachusetts Institute of Technology

Okay, and let’s also add that if it doesn’t work, you lose tenure. You see, Michael, that’s how things work in the real world when you propose a $30 billion spending plan that doesn’t pan out. Someone loses their job. In this case, let it be you.

The idea of a one-time tax credit spurring hiring is so pitifully naive it’s embarrassing. Although I think they know it won’t work but have discovered through polling and focus-grouping that a majority of people think it sounds like a good idea at first blush, so they will propose it anyway.

The whole thing is 100% political and totally dishonest. This Regime makes my stomach turn.

Isn’t the definition of insanity doing the same thing but expecting a different result?

Wolftech on August 30, 2011 at 9:46 AM

I was just getting ready to type that. But, hey! let’s continue to trash the republican candidates because the one ________ (insert handle of whatever person is currently trashing a republican candidate) supports isn’t high enough in the polls.

As KOR said, he doesn’t care whether they work longer term, all he’s going to want to do is goose the economy a little bit (such as with cash for clunkers and porkulus) so the MSM can try to convince the public that things are “improving” (however slowly) by Nov. 2012. After that, it’s on to more full-on socialist agenda items.

How is a payroll tax reduction or extending unemployemnt supposed to increase hiring? Let’s be honest, it’s just treats for the lapdogs, who will reward their gracious master with votes and wagging tails.

I don’t believe their goal is to succeed. I believe all they want is another 30-second reelection campaign advert to point the finger at Republicans and say “See, they stopped me. This time it would’ve worked but their obstruction is what did it.”

I don’t believe their goal is to succeed. I believe all they want is another 30-second reelection campaign advert to point the finger at Republicans and say “See, they stopped me. This time it would’ve worked but their obstruction is what did it.”

smfic on August 30, 2011 at 9:53 AM

Which is why the question has to be continually hammered: These ideas were tried before and didn’t work, why do they expect them work now?

Or simply ask them: How are these ideas different from what didn’t work before?

TNR today was saying tax the wealthy and use the funds to hire public sector employees, and it’s debt neutral! All to spur the attitude of people that things will get better and they will therefore start spending.

Obama and his administration have no idea of how capitalism works. Thus, they figure they can “pay” a few bucks to a company and it will hire an employee. It does not occur to Obama that they employee needs to do anything. Their view of the world is unions, like the post office and some teacher unions, in which “employees” get paid whether or not they do any work.
On the other hand, perhaps they do know how capitalism works but reject it and are using their phony “jobs” program solely for political purposes as part of their reelection campaign, needing that reelection to allow Obama the freedom to completely destroy the economy.

Sriously, all these piecemeal “stimulus” efforts are too narrow, too small to have an effect, or both. They’re only there to stimulate one job – Obama’s. They’re designed with one thing really in mind – to be seen doing something. It doesn’t even have to work all that well; it just has to be clear who gets the credit. the flip side of this is that they actively opose anything Republicans suggest, even if it would work, because they can’t let the Republicans be seen getting credit for ANYTHING.

Yep, and try to slam Republicans for ‘obstructing’ it, but Obama really isn’t making it easy for them to spin for him anymore.

Like some others have said, Republicans need to very loudly make their case for cutting onerous regulations and make it clear that Obama is just proposing scaled down versions of the same crap that didn’t work over the last two years – reheated in a microwave oven.

Actually, we had postings for unions on bulletin boards before, in the Carter years. We had to divide bulletin boards with tape and only post union stuff on one side and company stuff on the other. The unions didn’t pay for half of the bulletin boards, either. If giving tax breaks for companies to hire is such a good idea, why not cut taxes across the board. Cut taxes for seniors, too, and double the child credit since our birth rate has gone down.

Double that new-hire tax credit and employers will still have the same concern about hiring they do today: Nobody (literally) has any idea how much Obamacare is going to cost them per hire. And nobody will until the monstrosity goes live and trial lawyers get done working over both employers and insurers. All that can be known is that it’s going to cost.

Once the Socialist takeover is complete the synergies will all kick in and we will at long last have our prospereous collectivist Utopia. Until that time we must use any means necessary to decieve the chumps voters so as to allow time for our grand plan to come to fruition.